This blog is intended to go along with Population: An Introduction to Concepts and Issues, by John R. Weeks, published by Cengage Learning. The latest edition is the 12th (it came out in 2015), but this blog is meant to complement any edition of the book by showing the way in which demographic issues are regularly in the news.

If you are a user of my textbook and would like to suggest a blog post idea, please email me at: john.weeks@sdsu.edu

Monday, March 10, 2014

Can Thomas PIketty Explain the Relationship Between Population Growth and Inequality?

Income and wealth inequality has become a widely discussed issue over the past few years, due especially to the increasing inequality that has been measured for the U.S. This is a topic that seems naturally to involve economists, since it must have something to do with capital formation and/or accumulation. A new book is out today by Thomas Piketty of the Paris School of Economics that has generated a great deal of pre-publication publicity. I have not read the book, but I have read a couple of blog posts in the Economist and since they too will spread the word, commenting on them seems appropriate until I have a chance to read the book itself, beyond just being able to read selected pages on Amazon. The first article is sort of an Economist "book club" with a series of articles discussing the book, starting with the introduction. The overall thrust of the book seems to be that population growth is good for spreading money around, whereas slow growth leads to a concentration of wealth. In his Introduction, Piketty discusses Malthus, but neither he nor the Economist seems to have a good handle on what Malthus actually wrote. Picketty seems to think that Malthus was largely influenced by Arthur Young and was very worried that overpopulation would lead to something like the French Revolution. My reading of Malthus and his biographers suggests a very different view of Malthus' influences and goals. William Godwin was the inspiration for Malthus having gotten into the population issue and his concern about population growth overrunning the food supply was wrong, to be sure, but only because he did not understand that it was possible to increase productivity per acre. His theoretical deficiency on this score actually led to major insights by Darwin, as Darwin later acknowledged. Furthermore, Malthus did not believe that industrialization was anything more than a temporary phenomenon. Piketty's seeming mischaracterization of Malthus is not a good start to his book, in my estimation.The second Economist blog, from Buttonwood, takes on the population issue more directly.

But, having written quite a lot on demography in this post, I wanted to explore some of Mr Piketty's ideas and statistics on the topic; in particular the links between demography, growth and inequality. Readers will be familiar with the idea that growth comes from two sources; having more workers and making those workers more efficient (productivity). Roughly speaking, these two forces have been equally important, as this table from his book shows.

What stands out is the way that the last 400 years, and in particular the 20th century, breaks from the rest of history. Both population growth and economic growth have been much faster than before. We escaped from the Malthusian trap.

The results are not very satisfying in terms of explaining how the world works, however, for a number of reasons. First among these is that inequality is partly an economic issue, but is very importantly a social issue. Economists routinely ignore the fact that the economy and markets are comprised of people. Economists have been unable to predict levels of income and wealth inequality precisely because they ignore the deeply social nature of all human societies. Every economic trend can be both accelerated by and taken apart by the socially inspired decisions that people make individually and collectively. For a good popular read that provides insight on this very topic, I recommend a book by Tom Standage (an editor at the Economist, as it turns out) called Writing on the Wall: Social Media--the First 2,000 Years.This is a complex topic, so like the Economist, I will save more discussion for another day...

3 comments:

Prof Weeks ... a couple of thoughts about this. Give this some thought!!

1. My observation is that as we add more and more people to a crowded Earth - there is a very noticeable shift in societies to create a two-tier system. An upper crust of privilieged people who still live a life of luxury. And a lower caste of people who are struggling even for basic necessities. This type of arrangement is typical of a society that is fighting for dwindling resources, but must handle a burgeoning population. The interesting thing is that these trends are visible today across a variety of countries in the world, and a variety of political systems. Instead of a trend to "solve problems and distribute resources fairly" ... there is a trend to control the thoughts and behaviors of general populations and limit their access to the most valuable services.

2. One of the key hidden factors in how outcomes play out is "stress", or maybe we should call it "lifestyle stress". Some sort of overall indicator that measures how stressed people are, and how this affects their behavior (e.g. in choosing positive solutions as opposed to conflict-dominated solutions). Unfortunately, all of our current computer models that predict global outcomes do not account for this stress level. Yet its existence is indisputable, and it is highly likely to be a major factor that shapes the real outcome. Therefore, there is a need to understand the relaionship between population growth and "lifestyle stress". Once again, the stress comes about when a growing population tries to exist in an environment of limited (or depleted) resources.

Just some thoughts. If you see any published papers that are relevant to either conjecture - please not here.

Yes, I assumed that you meant "note" instead of "not." Stress is notoriously hard to quantify, but there have been studies of the way in which population density might induce stress (see the work in the 1970s by Omer Galle at UT Austin), and of course there is considerable research on environmental stress as a driver of demographic behavior, especially migration (see the journal Population and Environment). Closer to what you might have in mind is the hypothesis that economic uncertainty may drive some demographic behavior, especially causing women to postpone pregnancy and thus helping to account for lower than expected fertility in some less developed regions (see, for example, Chapter 10 in Weeks, Hill, and Stoler):http://www.amazon.com/Spatial-Inequalities-Poverty-GeoJournal-Library/dp/9400767315/ref=sr_1_1?ie=UTF8&qid=1394735419&sr=8-1&keywords=weeks+spatial+inequalities

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